About Those COT’S…

OK, where to start following a weekend of unabashedly PM-bullish, everything else bearish news? Following which, the Cartel executed, amidst the slowest global trading period of the year (U.S. markets closed Friday, and Europe today), its 137th “Sunday Night Sentiment” raid of the past 143 weekends, and 611th “2:15 AM” attack – featuring the ubiquitous “Cartel Herald” algorithm, of course – of the past 701 trading days. And I’m talking about dead trading activity – with U.S. stocks, bonds, and crude oil futures flat overnight, and base metals not even trading due to the LBMA holiday.

Which leads me to thisincredible “debate” between Harry Dent and Peter Schiff – in which the former, once and for all, proved his utter cluelessness of how markets work; whilst the latter, despite being, along with David Stockman, the most talented economist of our time, again displayed his gaping flaw of not realizing – or admitting – the gold markets is rigged. Aside from that, Schiff utterly destroyed Dent, point by point – with Dent, yet again, demonstrating his mastery of the art of misinformation. Which is a shame, as he too is a brilliant economist; but a terrible market forecaster; with frankly, a Cartel-like attitude toward gold. Don’t believe me? Check out thislist of his “amazing” track record – which doesn’t even incorporate his mid-2011 prediction, with the Dow around 12,000, that it would plunge to 3,000 in 2013; as opposed to what it actually did – start 2013 at 13,000, and end at 16,000.

As for Schiff, it is difficult to criticize a word he says about the economy. However, his insistence that the “dollar will tank” is what baffles me – as in doing so, he continues to focus on perhaps the most meaningless market indicator of all, the “dollar index” that essentially measures its value against the Euro, and to a lesser extent the Yen. For more than two years, I have shouted from the rooftops of the near impossibility of this occurring – as the collapsing European Union, and demographically imploding Japanese society, cannot possibly see their cancerous currencies surge against the dollar, no matter how overvalued the latter is. That said, I have equally shrilly predicted the dollar’s surge against other currencies, – which most certainly has occurred, to the point that gold is trading at, near, or in many cases well above, previous all-time highs in nearly all currencies. And yet, neither of the two even mention – let alone highlight – this giant pink elephant in the room. Let alone, that the only reason dollar-priced gold hasn’t, too, is relentless, 24/7 price suppression.

Meanwhile, Dent continued to espouse his age-old fallacy that gold will fall due to “deflation” – despite the fact that amidst the biggest commodity collapse in modern history, gold is not only five times above its turn-of-the-century lows, but nearly twice its 2008 crisis bottom low – which, I might add, was caused 100% by a vicious Cartel raid, that caused physical gold and silver premiums to surge to roughly 25% and 100%, respectively, amidst massive, global shortages. And equally fallacious, his ridiculous belief that gold will fall to $700 (ignoring the fact that the mining industry wouldn’t exist at that price) because the “dollar will surge.”

As noted above I agree that the dollar will rise against other fiat currencies (particularly “emerging market” and third world toilet paper) as the historic economic depression unfolds – not due to U.S. “strength,” but superior liquidity. However, Cartel suppression notwithstanding, gold has dramatically outperformed “the dollar” since the global fiat Ponzi scheme peaked at the turn of the century, with its strongest periods of relative strength during the worst “deflationary” scares – such as, for example, early 2016 and, yes, the 2008-08 financial crisis. Regarding the latter, it’s quite comical how so many people focus on the initial Precious Metal slam down in late 2008; ignoring entirely the physical shortages that ensued. Even more so, that Cartel attacks irrespective, gold was actually higher in 2008; and furthermore, that when the Dow finally bottomed in March 2009 (due to massive Central bank intervention), down 50% from its April 2008 highs, gold was 6% higher than its April 2008 level.

Speaking of fallacy – and in the process, the final nail in the coffin of the great American empire, Obama actually made the below, traitorous comments this weekend, in essence supporting socialism and even communism; in a speech in, of all places, the economically collapsing and currency hyper-inflating Argentina.

“So often in the past, there has been a division between left and right, between capitalists and communists or socialists – especially in the Americas, where it’s been a big debate. Those are interesting intellectual arguments – but I think for your generation, you should be practical and just choose what works. You don’t have to worry about whether it fits into socialist or capitalist theory. Just decide what works.”

This – ironically, on the day California approved a 50% minimum wage increase; amidst a week when relations with still-communist Cuba were renewed, and a year in which “healthcare” nearly overtook housing as the nation’s largest engine of “growth.” This, from a nation that spent decades; killing millions; at a cost of trillions; in the name of destroying Communism. Trillions, I might add, that not only catalyzed the explosion of an unpayable U.S. national debt, but the end of a gold standard that for decades prevented the Federal Reserve from the hyperinflationary monetary policy it has since destroyed the world, and America, with. Which, I might add, will likely immolate the “Land of the Setting Sun” first amongst “first world” nations, if today’s rumors of upcoming “major fiscal stimulus” have any truth to them. But don’t worry, Shinzo Abe said Friday he is “not thinking about a supplemental budget at this time”; just like his Central bank governor, Haruhiko Kuroda, said Japan would NOT implement a negative interest rate policy two months ago – one week before doing so!

Last but not least, on this early Monday morning “rant,” a final word about rapidly spreading newsletter writer fear-mongering about the “imminent collapse” of Precious Metal prices because the Cartel – er, “commercials” – have taken an out sized short position on the paper COMEX exchange. In last week’s “the COT’s don’t matter, Part II,” I invalidated such fallacy with actual facts, updating an article from 2012 which did the same thing. And today, I’ll do so further – admitting, of course, that in the very short run (such as, for instance, today’s COMEX options expiration), anything is possible.

To wit, the below chart depicts COMEX commercials’ net short position in silver futures over the past 17 years. As you can see, throughout a raging bull market, that started at $4/oz in 2001; temporarily peaked at $50/oz prior to May 1st, 2011’s “Sunday Night Paper Silver Massacre”; and sits above $15/oz as we speak, said “commercials” have never been long, not even for a day. And again, “commercials” is in quotes because essentially none of their trading has anything to with actual commerce.

As you can see, after nearly turning net long in mid-2015, they have engaged in their singularly largest incremental bout of (naked) shorting of the entire 17-year period. Quite obviously, in response to silver’s bottoming, despite their most egregious suppressions yet,amidst an environment of record global demand; vanishing above- ground supplies; peak production; and parabolically rising, hyper-inflationary monetary policy.

In this chart, I put red arrows at each “maximum commercial short” position of the past 14 years. And as you can see below, over the entire 14-year period, the average three-month silver price change following “maximum commercial short” positions was just 5%. Or, more accurately, a mere 2%, when excluding the massive, Cartel-induced 46% plunge in the Fall of 2008 (described above); as given the roughly 100% premiums actual physical silver traded at at the time, it’s disingenuous at best to claim silver “fell” –let alone, “plunged.” Moreover, the Cartel is far less “infallible” as many believe – if its near-spiritual experience of late 2010 to early 2011 suggests.

Following last Wednesday’s “Post-Brussels Bombing” Cartel raid – amidst the slowest trading week of the year thus far – silver is already down 4% from Tuesday’s “maximum commercial short” position; which likely, won’t get much larger, given that it is closing in on its highest-ever level. Thus, it’s quite difficult to envision, amidst the aforementioned environment of wildly bullish Precious Metal fundamentals, anything other than significant gains in the coming three months – or at the least, far more muted losses than said fear mongers suggest.

We won’t know what actually happens for another three months, of course. However, given how far below the industry’s cost of production prices have fallen – per the fact that mining companies lost more money in 2015 than they made in the prior eight yearscombined; and the aforementioned hyper-inflationary monetary policy environment; amidst the worst global economy since the Great Depression; the reasons to own PMs not as “investments,” but insurance has never been greater. Or better yet, for their principal utility as money – as proven by thousands of years of human experienced; as opposed to the hyper-inflating scrip Central banks have been flooding the world with at a record-breaking pace.

P.S. Remember what I wrote in yesterday’s article, “the most transparent lie of all time, part II” – of how various Fed governors’ post March 16th FOMC meeting claims that rates “might” be raised in April due to expectations of a significant 1Q GDP jump? Which as of last week, as now expected, by the Fed itself, to be no more than the fourth quarter’s pathetic gains? Well, let’s just see what the Atlanta Fed’s 1Q “GDP now” forecast churns out after the news that just came out as I edit – that like the massive downward revision of January retail sales (from +0.2% to -0.4%), the supposedly massive surge in January personal spending (due entirely to minimum wage hikes, I might add), was just revised from +0.5% to +0.1%!

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